Perspectives on Economics, Freedom, Liberty, Development & Change

Africa’s poverty persists in the midst of a wealth of natural resources, estimated by the United Nations Economic Commission on Africa as including 12 percent of the world’s oil reserves, 42 percent of its gold, 80 to 90 percent of chromium and platinum group metals, and 60 percent of arable land in addition to vast timber resources.

If these were idle, unexploited resources, it would be one thing.

However, the reality is that they are increasingly being exploited: investment and trade in Africa’s resources sector is on the rise, largely accounting for the sustained GDP growth rates witnessed over the last decade. The Economist magazine has reported increased foreign direct investment into Africa, rising from U.S. $15 billion in 2002, to $37 billion in 2006 to $46 billion in 2012.

While trade with China alone went up from $11 billion in 2003, to $166 billion in 2012, very little can be pointed to in commensurate changes in human development and fundamental economic transformation. It is multi-national corporations and a few local elites which are benefiting disproportionately from the reported growth – exacerbating inequality and further reinforcing the characteristic “enclave economy” structural defect of most African economies.

The disparity between sustained GDP growth rates and Africa’s seemingly obstinate and perverse state of underdevelopment, extreme poverty and deepening inequality brings to the fore issues of inclusivity and responsible governance of domestic resources. The question that is being asked by many – especially Africa’s young people who have assumed the agenda for economic transformation as a generational mandate – is this: Why are we so poor? Yet we are so rich?